Basmati Rice Prices: Expected Drop Amid Iran-Israel Tensions

How Geopolitical Issues Affect Basmati Rice Exports

In 2024-25, India exported basmati rice worth ₹6,374 crores to Iran.

Recent Changes in Basmati Rice Prices

Basmati rice prices have gone up by 15-20% in the last two months. This is because of increased exports. But prices may drop soon. This could happen due to a possible decrease in exports to Iran. Iran is currently in conflict with Israel.

Iran’s Importance in Basmati Rice Trade

Iran is a big buyer of Indian basmati rice. It is the third-largest purchaser. Saudi Arabia and Iraq are the top two buyers. In 2024-25, India exported basmati rice worth ₹6,374 crores to Iran. This is 12.6% of India’s total basmati exports for that period.

Market Trends and Price Changes

Several countries from West Asia and Iran bought more basmati rice. This happened after prices dropped to ₹75-90/kg. The increased demand led to higher prices.

Rajesh Jain Paharia, a basmati rice exporter, noted a recent price drop. Prices went from $950-1000/tonne to $900-950/tonne in about a month.

Factors Affecting Price Stability

Several things affect basmati rice prices. These include:

• Freight costs
• Transshipment issues

Dhaval Shah, another exporter, said prices were lowest in April. Global export demand was low due to many factors. But demand increased as buyers wanted to stock up at low prices. This surge in exports led to a 15-20% price increase in May.

Future Outlook and Potential Concerns

Prices are likely to stay stable for now. But factors like the “Trump effect” or war escalation could change this. Countries buy more to ensure food security if they see signs of war escalation.

Prem Garg, the national president of the Indian Rice Exporters Federation, has some concerns. These include:

• Current sea shipments
• Pending payment issues

Trade estimates show outstanding dues for basmati trade with Iran amount to ₹1,000-1,200 crore.

Rajesh Jain Paharia mentioned that in trade with Iran, they take a 20% advance payment. The rest is on 180 days credit.